Labour union threatens industrial action against EADS

German company proposes 20 per cent cuts

11/27/2013|labour-reporter.com|Last Updated: 11/27/2013

FRANKFURT (REUTERS) — Germany's powerful IG Metall labour union warned that it may call on workers at EADS to take further industrial action to protest the European aerospace company's planned restructuring.

"If the demands of management are too extreme and seem disproportionate to us, then further action is certainly to be expected," IG Metall board member Juergen Kerner told Reuters in an interview.

EADS said in July it would combine its defense and space subsidiaries, effective January 1, and might sell off units that are small and easily segregated from the rest, sparking concern about job cuts at the company.

German daily Handelsblatt on Wednesday reported EADS saw savings potential of 690 million euros ($936 million) from the move. EADS, which is due to give further details on the restructuring program on December 9, declined to comment.

To put pressure on management before it announces details of the restructuring, which is due to run through July, IG Metall has already called on workers to walk off the job at EADS sites across Germany on November 28.

Kerner said further action could follow but said that did not necessarily mean workers would go on strike.

"In this company it would be sufficient if workers just worked five days a week and no overtime for one or two weeks, that would throw into disarray all programs and all delivery schedules," he said.

Two industry sources told Reuters last week that the restructuring would cost thousands of jobs but fewer than the 8,000 previously reported by German news agency DPA.

The DPA report last week said EADS was planning to cut up to 20 percent of the roughly 40,000-strong workforce at its newly-created Airbus Defense & Space division.

Job cuts of that magnitude would not be possible with "soft" measures such as relocations, part-time work or early retirement, Kerner said.

"And harder measures would be absolutely unacceptable to workers at this company, with the current order backlog. That would be met with opposition," he said.

At the end of September, EADS had an order book of 642 billion euros, up 17 percent from a year earlier. Airplane maker Airbus accounts for the bulk of the orders.

The shake-up at EADS aims to provide greater cohesion to disparate defense activities and comes a year after Chief Executive Tom Enders had to bow to political opposition to his attempt to merge with UK arms firm BAE Systems.

It is also meant to help the group reach an operating margin target of 10 percent in 2015, excluding its new A350 program, compared with 5.3 percent in 2012.

IG Metall has been critical of EADS's focus on a firm margin target across the company, considering some of its businesses are traditionally more profitable than others.

"Our concern is that if all managers are subject to the expectation that this 10 percent margin target is reached as quickly as possible, then divisions could end up pushing back investments just to hit that mark. That would be the totally wrong signal for a technology company like EADS," Kerner said.